There is a lot of discussion and speculation among business analysts regarding the impact of e-retail on brick-and-mortar retail space. While most tend to agree that e-retail will have a negative impact on the demand for retail space, they often overlook the positive impact it is having on demand for industrial and warehouse space.
Online shoppers want to be able to receive their products as quickly and as easily as possible, and this is driving the demand for industrial real estate up across the country. With an estimated 30 percent of industrial big-box warehouse demand correlated to e-commerce, and with that proportion only expected to grow in the future, it’s easy to see why.
Online shopping is a growing trend, and this is what is driving the demand for industrial warehouse space. On a global basis, e-commerce sales are growing at roughly 20 percent annually, with the percent of retail sales made online expected to jump from 6.2 percent in 2013 to 10 percent by 2017. The demand for industrial space by these online retailers is not only growing, it's changing.
Online retailers need roughly three times as much space devoted to logistics as their brick-and-mortar counterparts. This is due to the fact that, unlike traditional warehouses, e-retailers, often carrying a greater variety of stock, must account for picking and packaging as well as space for handling customer service issues, such as returns. This is leading many retailers to construct their own logistics facilities. For example, Walmart, a traditionally brick-and-mortar retailer, is increasing its number of distribution centers with the hope of matching Amazon’s product offerings and shipping times within the next two years. This increase in availability will only help to drive demand for industrial space up, as more retailers shift towards offering quick and convenient delivery for their products.